Firm Start Called For China Stock Market

12/20/2012 7:51 PM ET

The China stock market turned higher again on Thursday, one session after it had ended the three-day winning streak in which it had surged more than 100 points or 4.7 percent. Now at a fresh four-month closing high, the Shanghai Composite Index settled just below the 2,170-point plateau - and now analysts are forecasting continued support when the market opens on Friday.

The global forecast for the Asian markets is mixed with an upside bias as upbeat economic data is likely to be offset by continued uncertainty about the fiscal cliff. In the United States, reports showing stronger than expected existing home sales growth and a rebound in Philadelphia-area manufacturing activity. But President Barack Obama and House Speaker John Boehner continue to blame each other for the budget stalemate in the cliff negotiations. The European markets were mixed and the U.S. bourses were higher, and the Asian markets are tipped to split the difference.

The SCI finished slightly higher on Thursday as gains from the property stocks were offset by weakness from the financial shares.

For the day, the index was up 6.11 points or 0.28 percent to finish at 2,168.35 after trading between 2,142.95 and 2,174.82.The Shenzhen Composite Index gained 4.85 points or 0.6 percent to end at 827.57.

The lead from Wall Street is cautiously optimistic as stocks moved modestly higher on Thursday after showing a lack of direction in morning trading. While upbeat economic data generated some buying interest, continued uncertainty about the fiscal cliff limited the upside for the markets.

The modest strength followed upbeat U.S. economic data, including reports showing stronger than expected existing home sales growth and a rebound in Philadelphia-area manufacturing activity.

The National Association of Realtors said existing home sales rose 5.9 percent to an annual rate of 5.04 million in November from a downwardly revised 4.76 million in October. Economists had expected existing home sales to climb to 4.90 million. With the gain, existing home sales rose to their highest level since spiking to 5.44 million in November 2009.

Separately, the Philadelphia Federal Reserve said its diffusion index of current activity climbed to a positive 8.1 in December from -10.7 in November, with a positive reading indicating an increase in manufacturing activity. Economists had expected the index to remain negative.

The Commerce Department also reported a bigger than expected upward revision to the pace of GDP growth in the third quarter, while the Labor Department reported a modest rebound in weekly jobless claims.

Buying interest remained subdued, however, as traders kept an eye on Washington amid indications that a budget agreement is not as close as it appeared earlier in the week as President Barack Obama and House Speaker John Boehner continue to blame each other for the stalemate.

Boehner's "Plan B" legislation would extend the Bush-era tax cuts for people making up to $1 million, but Democrats claim it would raise taxes on millions of working families by eliminating certain tax credits.

The major U.S. averages were higher on Thursday as the Dow rose 59.75 points or 0.5 percent to finish at 13,311.72, while the NASDAQ edged up 6.03 points or 0.2 percent to close at 3,050.39 and the S&P 500 climbed 7.88 points or 0.6 percent to end at 1,443.69.